I understand that a EULA can be a contract if the user agrees to compensate the issuer for using the software, but if the software is freeware, then the issuer gains nothing of value. Without the issuer gaining anything of value, how is there adequate consideration/why is the agreement still considered a contract?

Again, I understand that consideration need not be monetary, it can be the other party waiving a right. But that right must exist prior to entering into the agreement. The EULA grants the user the right to use the product so prior to entering into the agreement the user has no right to use it to begin with.

1 Answer 1


The user gains the use of the software, the EULA issuer gains the limitations on how the user of the freeware will use it, that for example, prevent the freeware user from exploiting the issuer's labor by reusing it for profit. Consideration doesn't have to be monetary.

As a practical matter, sometimes the business model is to give the software away as a loss leader and to have the issuer make their money with training and consulting on how to use it.

Also, even in the absence of consideration, a promise upon which the person benefiting from the promise reasonably relies is enforceable under the doctrine of promissory estoppel.

Further, EULA stands for "end user license agreement" and there are many times that license agreements aren't full fledged contracts. They are merely limited grants of permission to use something, often not even amounting to a full fledged property right or contract right.

For example, if I let my neighbor walk into my living room while we talk and have tea, the right of the neighbor to be in my living room is called a license, even though it is not a contract. A license can be embedded in a contract, but it doesn't have to be.

  • I understand that, but prior to accepting the EULA, the user has no right to use the product. Commented Feb 23, 2022 at 0:39
  • Got it. So a license may or may not be a contract, yes? Commented Feb 23, 2022 at 0:46
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    @DanielGoldman Definitely. Sometimes it is not a contract or a promise. Sometimes it is a promise but not a contract. Sometimes it is a contract and a promise.
    – ohwilleke
    Commented Feb 23, 2022 at 0:51
  • 1
    Often you have the rights that copyright law is giving you - which may be very little indeed. But if the EULA says "you are not allowed to do X unless you do Y", and this isn't contradicted by copyright law, then it doesn't matter much whether you accept the EULA or not. Either way, you are not allowed to do X unless you do Y.
    – gnasher729
    Commented Feb 23, 2022 at 16:29

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